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Immigrant-trade links, transplanted home bias and network effects

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  • Roger White

Abstract

Macro-level data for the US and 73 trading partners spanning the years 1980 to 2001 is used with a gravity specification to investigate the influence of immigration on bilateral trade. Prior research has identified immigrant stocks as a significant determinant of trade; however, this study indicates that the US immigrant-trade link is driven by immigration from relatively low income countries. A 10% increase in the immigrant stock is found to generate respectively 4.7 and 1.5% increases in domestic imports from and exports to the typical low income home country. The observed link is decomposed into two hypothesized channels-network effects and transplanted home bias. Considerable variation in per-immigrant trade effects is found across home countries: imports from the typical low income home country are estimated to increase by up to $2057 due to transplanted home bias and by as much as $2967 as a result of network effects, while exports rise by up to $910 as a result of networks.

Suggested Citation

  • Roger White, 2007. "Immigrant-trade links, transplanted home bias and network effects," Applied Economics, Taylor & Francis Journals, vol. 39(7), pages 839-852.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:7:p:839-852
    DOI: 10.1080/00036840500447849
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